Guotai Haitong: Maintains "buy" rating on XIAOMI-W(01810) with a target price of HK$65.7

Guotai Haitong released a research report stating that the adjusted operating income for XIAOMI-W(01810) for FY2025E-FY2027E is RMB 4823/6347/7506 billion (compared to the previous values of RMB 4891/6418/7584 billion); the adjusted net profit forecast is RMB 436/679/833 billion (compared to the previous values of RMB 454/681/836 billion). The price target for Xiaomi Group is adjusted to HK$65.7, with a "buy" rating maintained. The report states that the monthly delivery volume of automobiles is gradually increasing, with an estimated Q3 delivery volume of Xiaomi cars nearing 109,000 units. In terms of ASP, with the increased delivery of Yu7, the report predicts a slight increase in Q3 ASP for automobiles, corresponding to approximately RMB 29.2 billion in Q3 automobile sales revenue. The scale effect is evident, coupled with the significant cost reduction and efficiency improvement effects of the production line, the report predicts that Xiaomi cars are expected to achieve profitability at the operational level in Q3. According to IDC, the global smartphone shipments in 25Q3 increased by 2.6% year-on-year, with Xiaomi's global smartphone shipments increasing by 1.8% year-on-year to 43.5 million units, maintaining a market share of 13.5%, a slight decrease of 0.1% year-on-year. In the Chinese market, Xiaomi's smartphone shipments in 25Q3 decreased by 1.7% year-on-year to 10 million units. Due to the decline in the sales ratio in the Chinese market and the impact of increasing storage prices, the report predicts a slight decline of 0.5% in Q3 Xiaomi smartphone gross margin quarter-on-quarter to 11%. According to Lu Weibing, on October 23, the total sales volume of the Xiaomi 17 series released at the end of September increased by 30% compared to the previous generation, with the Pro version accounting for more than 80%, indicating significant progress in high-end products, which the report believes may offset some of the impact of storage price increases in Q4. The report states that the company prioritizes the profitability of IOT, with the internet contributing stable income and gross profit. Due to the traditional off-peak season in Q3 and the reduction in government subsidies, the report predicts a 6% year-on-year increase in IOT revenue to RMB 27.7 billion, with a slight decrease quarter-on-quarter, and a predicted quarter-on-quarter increase of 0.5% in IOT gross profit margin to 23%. The internet contributes stable income and gross profit, with an estimated 7.7% year-on-year increase in Q3 internet revenue, and a stable gross profit margin of 75.4% quarter-on-quarter.